Save Article

‘Prudent Lending’ May Need Bankers to Be Piñatas

Another major impediment to reform is that many in Congress are passionate about prudent lending only when house prices go down.

Dec. 30, 2014 6:59 p.m. ET

You recap a recent Congressional Budget Office report indicating that Fannie Mae and Freddie Mac could be replaced by private companies over the next 10 years and that “Life Without Fannie and Freddie” (Review & Outlook, Dec. 27) would not be so bad for the housing market. Mortgage rates for some borrowers would go up a little as Fan and Fred reduce taxpayer-backed guarantees. House prices might drop by a small percentage, but that also would make housing marginally more affordable for renters and first-time buyers.